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It seems like it’s now open season on GM management in the Swedish press, which is fine with me as long as they’re being accurate.
This latest report is from Dagens Industri, translated once again by ctm. There’s some jewels in this one!
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Production in Sweden can save 30% on every Saab
Saab Automobile is planning to move the manufacturing of today’s 9-3 convertible from Austria – and produce the new 9-5 in Trollhättan. According to our sources, that would give a drastic reductions in cost. “It would mean about 30 per cent on every car,” says one informed source in the automotive industry.
The information that Saab want to produce new Saab 9-5 in Trollhättan has mostly been seen as a political gambit in negotiations with the government on financial support. But it is in fact also about improving the whole deal. By escaping the high costs of production of the Opel factory in Rüsselsheim in Germany, Saab Automobile can be almost immediately be profitable with the help of 9-5 production. “If you make a 100,000 cars in Trollhättan, Saab is a really good business,” says DI’s source.
Saab management now looks at two alternatives:
Start production of the bodies in Rüsselsheim and then transport them to Trollhättan for final assembly.
Wait some and then start the entire production in Sweden. The delay involved in that case would only be a few months. Both the 9-5 and the 9-4X are ready to be manufactured, but both have been slowed by GM’s management – with Bob Lutz as the largest stumbling block.
But Saab is also looking to bring home today’s production of 9-3 convertible, which are made by Magna Steyr in Austria. “Saab could save more if they move also the purchase from Europe to Sweden. But GM has so far refused to go along with it,” says DI’s source.
Saab aims to reach a volume of 150,000 cars in 2011, which would mean a profitable company for the first time in over 20 years – except for one profitable year in the mid-ninties.
The long row of losses is one reason the owner General Motors has identified as to why they want to get rid of Saab. “Saab has been a financial disaster for us,” said Bob Lutz in an interview in Detroit.
But the truth is that the responsibility for the disaster to the vast majority are with the GM management. Saab’s leadership in Sweden has lost every opportunity to independently control the company. All major decisions on the development of new cars, production, and purchase of components have been taken by GM.
New data also says that it is almost impossible to know how big Saab losses really are, because the costs and revenues is not clear inside GM. Furthermore, the financial statements submitted to the Swedish Companies Registration Office does not contain all of Saab activities.
One alternative that has become interesting is one of cooperation and a possible sales of Saab to Fiat. Fiat has no sale in the U.S. and could speed up the planned launch of the Alfa Romeo through Saab’s dealer network in the U.S.. Fiat and Saab cooperated in the late 1970s on the 9000 model, which also gave three different versions of Fiat, and today there is some cooperation on engines.
A few years ago, Fiat and Saab developed a completely new platform for luxury cars in Pixbo outside Gothenburg. But the platform were only used at Fiat (Alfa 159 and Alfa Brera), while Saab’s prospective models were stopped by the GM management.
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I think they’re 100% speculating on the Fiat thing. If there’s a buyer for Saab, that buyer probably won’t emerge for a year or two.
Everyone’s got their hands full just surviving at the moment.
SW
19 responses so far ↓
1 Karen
// Jan 18, 2009 at 7:22 am
aside from the Lutz hyperbole “financial disaster”, I do wonder how much of the 30% cost advantage is due to the SEK versus Euro.
“Saab could save more if they move also the purchase from Europe to Sweden. But GM has so far refused to go along with it,” says DI’s source. I think DI’s source meant purchasing – of parts and components. Would assume Sweden is also looking at preserving the supply network inside Sweden.
As to Fiat, well, could be more than speculation. Seems like Fiat has reasons for some payback to GM, AND gain high quality engineering/manufacturing outside the Euro zone.
2 max
// Jan 18, 2009 at 7:43 am
The general manager of Saab USA has to ask Bob Lutz for toilet paper. GM is the worst company to deal with …ever. At least when Saab was headquartered in Norcross, GA you could call someone who knew that Saabs were made in Sweden…..The latest laughable was my GM rep thought Saabs all ran on regular fuel…I mean come-on.. And GM wants us to train our personnel….
3 cj
// Jan 18, 2009 at 7:58 am
Karen, i think that the main reason for the 30% is that swedish salaries are considerably lower than the german.
To that you can add the fact that the swedish peso have lost alot in value vs the euro so that also make a difference.
Lastly, for SAAB as “one” company already having the infrastructure and staff in trollhattan the additional fixed cost, incl semi variable costs such as labour, may be nil.
From what i read in the comments to the DI article, russelheim won the competition for the 9-5 because their production estimates where significantly underestimating the costs. Not sure how biased that is but still (remember that if trollhattan would have won they would have had to invest alot in that factory when they already had done those investments in russelsheim, plus that the german union is considerably stronger.
Anyway, i would prefer if GM kept saab. I think chanses for this is good. They have already done the tools for hte 9-5 and 9-4 even if they are not paid (if they closed saab they would still have to pay for them).
GM needs to show the us government that they can act + talking loud = more support from the swedish government. When this is over, hummer will be no more, saturns will be rebadged opels (and maybe they will build opels in the us go reduce production costs) and pontiac will be marginalized.
A stand alone saab will ultimately face the same faith as rover. You need economics of scale and large resources to be able to develop new models. I dont think that FIAT, or Peugot/citroen would be a good owner. The only possible owner that would work is a chinese which would open up that market and give access to low cost production but you need someone with large resources and right now there are not that many of those out there as debt financing is very hard to get.
CJ
4 bleuler
// Jan 18, 2009 at 8:02 am
Is my thinking paranoid, or does it seem that Lutzy-boy only wants Saab’s engineering prowess and to hide some of GM’s losses from the boys on Wall street? Maybe I’m stating the obvious as well.
He’s a total idiot. Apart from his decent taste in design, he is a shining example of everything wrong with American management
5 ctm
// Jan 18, 2009 at 8:10 am
Karen,
I think DI’s source meant purchasing – of parts and components.
I didn’t get exactly what they meant in the article. Buy more stuff from Swedish suppliers, or move Saab’s purchase function from GM Europe to Sweden?
The Rüsselsheim thing is interesting. So that plant got the Saab production due to political reason, i.e. satisfying IG Metall at Opel? I guess this issue gonna explode if Saabs production is moved to Sweden and becomes cheaper there.
Fiat… Yes, maybe some connections are still there between engineers at the two companies. Maybe the cooperation has been an effective one and there are still a mutual respect that could lead to something. But Fiat seems to be in bed with PSA at the moment.
6 Karen
// Jan 18, 2009 at 8:41 am
@cj: forgive my abbreviation. SEK is used for the Swedish Krona, so SEK versus Euro is the same as what you meant though I’d be careful saying peso in front of a Swede. noooo to Chinese, nothing personal, just see no synergies.
@ctm: my Swedish is based on my rusty German, but your translation probable meant buy more stuff from Swedish suppliers AND move the Saab purchasing function from GME to Trollhattan. Having flashbacks to the corporate purchasing wars of the 1990’s . The consultants like McKinsey come in and say centralize in corporate. The factories who produce unique products rebel (having to requisition everything including toilet paper through corporate).
Then the consultants like Bain come in and say sole source, that by consolidating your supplier base you’ll save tons of money. After the nimble, smaller suppliers go bankrupt, everyone suddenly has to hide the fact that sole sourcing and supplier consolidation damaged quality and service.
Fiat is big in Brazil, established in Russia, has maintained their reputation (?help me out Eurozone guys) – why not look to take Saab under it’s wing and take advantage of that Swedish Krona and sell many more Saabs in Russia where they surely appreciate heated seats?
At least Fiat has empathy for Saab – Fiat could have been GM’s next victim.
7 Markac
// Jan 18, 2009 at 9:18 am
Swade, I’m not sure that GM has ‘a year or two’, at least in it’s current form. If GM is still planning to sell Saab, Rüsselsheim has no reason to hang on to 9-5 production. I would hate to see a ’separated’ Saab having to buy it’s cars from Opel if it didn’t have to. Reminds me too much of the Tata-Ford arrangement for Jaguar production. Let’s wait just a little longer and get everything happening in Sweden. That makes Saab more attractive to possible buyers as well, hopefully Fiat is one of them?
8 zippy
// Jan 18, 2009 at 9:34 am
I was kinda thinking Fiat right from the get-go. With Alfa Romeo considering a switch to RWD Saab would take over the high-end FWD mantel from them. Just imagine a Saab 9-5 with a turbocharged Alfa six with that glorious Alfa V6 ‘bark’ in its wake as she blasts up the highway. Anyone who has heard an Alfa V6 will know what I mean. Anyone who has seen an Alfa V6 engine witnesses a beauty that only Ferrari can beat – just about.
I feel very secure in the knowledge that Saab is heading in the right direction. All we need is for K-Lutz to let go!!
9 Eduard(Edusaab)
// Jan 18, 2009 at 10:05 am
As I said many times, the Russlheim-Trollhattan issue, was due German unions pressure and political reasons, the wheight of Opel in GME and nothing else. In terms of costs is well known that Trollhattan wins, only in logistics Russelheim has some advantage, but not much and that issue has some asy solutions in Trollhattan, due Government investments for improving road and rail transport, and the investment is quite low, Goteborg its quite near to Trollhattan.
All we know the last infor about costs, thanks to the posts here in Trollhattansaab. And also in one article I always do a reference from 2002. http://elmundomotor.elmundo.es/elmundomotor/2002/09/13/empresas/1031932833.html
in here it talks about the intention of Saab to use the aluminium in its car and also in the future to build cars in aluminium, with the 9-3ss and the big invesment in trollhattan for that model they were able to do it.
Another thing it says is, that the costs in Trollhattan are similar to the GM Figueruelas plant in Spain and the cost of 1 engineer in Russelheim you have 2 in Sweden. Thanks to productivity improvements in trollhattan during the 90’s they were more competitive and with the Viggen plant applied after the 9-3ss, they improved much more its competitiveness.
If Trollhattan its able to improve and be able to be so flexible to produce different cars in the same plant as a 9-5 and a 9-1, it could be one of the bests plants in the world.
About Fiat Group, well all we know what Sergio marchionne thinks about the Automotive Industry future, and he has a lot of reason. Why only one partner?? why not to find the best partner for every issue?? and to create a network of partnerships.
regards
10 David Blumberg
// Jan 18, 2009 at 10:41 am
Good to see the press putting the blame where it belongs: on GM.
Move everything back to Sweden and let Saab be Saab. THEN we’ll have the glory days back, just like it used to be. Clearly the management of GM have never and will never understand Saab, and as long as they restrain and control it, Saab will suffer and die a slow painful death.
11 Frank
// Jan 18, 2009 at 10:46 am
IF there would be another linkup with the Italians I’d be tempted to trade in my GM 9-5 Griffin for a nice old 9000 Aero….
‘Back to the Future’ … sort of…
12 Qwestar
// Jan 18, 2009 at 11:22 am
The dash of a 9000 always had the most ‘airplane-feel’ to it, especially if you added the 3 extra gauges..
And the built-quality was a lot better than its Italian cousins.
13 Andy Rupert
// Jan 18, 2009 at 2:02 pm
Tell the truth, Swade. You want Alfa and Saab to marry, right? I know you do.
14 PT
// Jan 18, 2009 at 7:06 pm
Swade, I’ve gotta agree with Markac. Saab doesn’t have two years. Nor does GM.
Fascinating that Lutz is now copping it from all sides. Starting to remind me of Stadtler & Waldorf, the old fools on the balcony on The Mupper Show. Cranky, hilarious & irrelevant.
Goodbye Bob.
Although everyone in the car biz seems to be trying to weather this storm with evolution, I think that revolution is what will come to pass when the cookie finally crumbles.
Saab could do a lot worse than Fiat. The italians have some serious momentum these days.
15 99GL
// Jan 18, 2009 at 9:40 pm
Sounds a bit worrying when DI says ‘costs and revenues [are] not clear within GM’. I hope that whoever calculated that a standalone Saab could be profitable also allowed for all those costs which would inevitably come out of the corporate woodwork when real money needs to change hands.
16 PT
// Jan 19, 2009 at 8:15 am
Agreed 99Gl. Therein lies the issue at the heart of all of this financial meltdown. Lack of transparency & therefore heightened risk. All good when things are booming, not so hot when in freefall.
The 2008 Financial Crisis. Created by accountants for accountants.
17 ctm
// Jan 19, 2009 at 8:44 am
I guess one reason to have a corporate group (or conglomerate or whatever) is to have the ability to hide the real sources of any profits and losses. When one part shows red or black figures, it is often because someone want’s them to be that way at that moment – not necessarily because they really are.
18 AEROPILOT
// Jan 19, 2009 at 6:33 pm
Zippy !
The good old Alfa V6 is dead !
Now the Alfa’s having the GM V6 engine (as the 9-3 Aero) but with 3 or 3.2 liters capacity.
Again a mainstream GM product is put in a niche car !
I guess it is a deal with GM / Fiat in terms of engine exchanges as Saab /Opel uses Fiat diesels !
So now the heart of Alfa is GM , and with the end of present 9-5 it’s over with Saab engines made in Sweden. Sorry, I can’t stand it
19 Dippen
// Jan 20, 2009 at 8:34 am
ok,lets put aside Fiat :
http://www.upi.com/Business_News/2009/01/19/Chrysler_Fiat_may_announce_joint_venture/UPI-75831232399042/